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Every important interest or movement presents itself 
to the serious thinker in the twofold aspect of past and 
future — history and prophecy. Only through a knowl- 
edge of the first is the second possible ; only through an 
interest in the second does the first assume its rightful 

I propose to direct your attention briefly to the subject 
of accountancy in the light of these two aspects, that we 
may find what it now stands for and also, if possible, 
gain an insight into what it may become if proper efforts 
are directed toward the evolution of higher professional 

In the first or historical aspect, it may be said that while 
accountancy as a distinct profession in the United States 
is of so recent a development that it may be said to have 
scarcely any history, yet on the other side of the Atlantic, 
particularly in Scotland, it has been recognized for more 
than a century as a distinct and honorable calling; and 
for over half of that time Scottish societies have de- 
manded a training upon the part of candidates for 
admission equal to the education required in law and in 

In England, while of a somewhat later growth, account- 
ancy has made rapid strides. In the two great societies 
now existing there are at least five thousand accountants 


86 American Economic Association 

who may be said to be in active practice. In addition to 
this many have gone out to the British colonies, while 
still others, trained in England or Scotland, have come to 
our shores and, in not a few cases, have become leaders 
in the profession in the United States. 

Prior to twenty years ago the public accountant was in 
no true sense a factor in American business life. Indeed, 
it would not be far wide of the mark to apply this state- 
ment to a period within ten years, during which the work 
of public accountants has at least quadrupled, if indeed 
it has not increased ten-fold. Without boasting, this 
fact must be recognized in considering present conditions, 
for obviously the pressure that has been put upon individ- 
ual accountants during these recent years has not favored 
the development of a high type of professional life. While 
this acknowledgment does not justify certain present con- 
ditions, it does at least explain why they exist, if it does 
not to some extent excuse them. 

In its legislative development accountancy has followed 
the general trend of that of the medical profession some 
years ago. Thus far, the legislation that has been ef- 
fected merely provides for recognition and also sets up 
prescribed standards, which, when attained by the appli- 
cant, permit his using the title of Certified Public Ac- 
countant, or its distinctive initials, C. P. A. This usage 
guarantees to the public that certain requirements have 
been complied with. Earnest efforts are being made to 
raise these standards to a higher level with an approxi- 
mate uniformity among the states. Anyone who so desires 
and who can find clients to patronize him is at liberty to 
practice as a public accountant anywhere in the United 
States. It is, however, altogether probable that within a 
short time restrictive legislation will be secured under 
which it will be necessary for all those who wish to prac- 

Accounting as a Profession 87 

tice to conform to reasonable standards of education and 

In Great Britain, because of the standing of account- 
ancy as a profession, young men of good family and with 
a college or university education are attracted to it in 
large numbers. Before being permitted to practice as 
a chartered accountant, however, these men must pass 
through an articled clerkship of from three to five years, 
during which time they draw no salary. Moreover, they 
usually pay a premium of from a thousand to twenty-five 
hundred dollars before being articled. After passing 
their preliminary examinations they must succeed in an 
intermediate and in a final examination. These tests 
cover not only accounting in the ordinary sense of the 
term, but also require a good knowledge of mathematics, 
economics, and at least one modern language. 

In America the articled clerk system does not exist. 
A young man coming into the profession here can either 
enter the office of an accountant as a clerk on a salary, or 
he can secure part at least of his theoretical training in 
one of the university schools. These schools are of such 
recent origin that it is yet too early to determine just how 
useful a purpose they are going to serve in the develop- 
ment of accountancy, but the attitude of accountants gen- 
erally toward them is that of hopeful anticipation. That 
they have not yet provided a form of training that has 
been wholly satisfactory to accountants is doubtless due 
at least in part to the difficulty of securing instructors 
who understand something more than the most elemen- 
tary features of accountancy. It would hardly be ex- 
pected that a medical school could attain high reputation 
with a faculty composed of men who, however great their 
knowledge in allied fields, were possessed of no hard 
earned experience in the diagnosis and treatment of dis- 

88 American Economic Association 

ease. It is to be hoped, therefore, that the university- 
schools may not be manned entirely by instructors who 
have only a theoretical knowledge of accounting practice. 
This point is vital, and any school failing in it is likely to 
prove disappointing to the institution with which it is 
connected and to the profession which it aims to serve. 

In spite of the lack of orderly means of training, the 
public accountant has attained in this country a position 
of considerable importance. The intelligent business 
man of today knows what a public accountant is, and has 
a fairly clear notion of what he does. 

Corporations of the better class here are of their own 
volition rapidly adopting a practice long established in 
England (which has become obligatory under the Com- 
panies act of 1900), and are retaining public account- 
ants to make periodical audits. Such corporations us- 
ually publish a certificate signed by these auditors, testi- 
fying to the integrity of the accounts issued to the invest- 
ing public. Within very recent years this practice has 
made such headway that the present rate of increase will 
shortly place in an apologetic position those corporations 
that do not adopt the practice. 

Thus, in the audit of accounts of corporations and 
others, in the investigation of properties for prospective 
purchasers, in the organization and installation of ac- 
counting systems and in the revision of business methods, 
the accountant of today finds himself in a position where 
he not only has the favorable opinion of the business 
community, but finds in his work a constantly enlarging 
sphere of usefulness. 

Turning next to the more speculative, and perhaps 
more interesting, division of my subject — the prophetic 
aspect — let us attempt to investigate the probable devel- 
opment of this youngster that has landed in a somewhat 

Accounting as a Profession 89 

rough-and-tumble fashion in our midst. It would seem 
as though three courses are open, along any one of which 
it might be possible for accountancy to develop. 

First, after the manner of the age, it might merge with 
other existing professions, or with parts thereof, to form 
a composite profession including, perhaps, certain classes 
of work now conducted by engineers, and possibly also 
absorbing certain- kinds of work now carried on by the 
legal profession, and also taking up the burden of that 
somewhat shadowy individual, the business adviser. 

It is reasonable to presume that the successful engineer 
of the future will have a more comprehensive knowledge 
of accounts and accounting practice than had his brother 
of the past ; and the lawyer, too, is finding that his prac- 
tice often takes him into the field of accounts, of which 
he can no longer afford to be ignorant. It is hardly 
likely, however, that either of these professions will ser- 
iously attempt the difficult task of riding two horses at 
once. It is much more likely that both will assume to- 
ward accountancy the attitude now adopted by the best 
accountants toward engineering, and particularly toward 
the law. An accountant in active practice needs to have 
a fairly comprehensive knowledge of those branches of 
legal knowledge commonly known as commercial law. 
This knowledge, however, does not in any way interfere 
with his relations with the legal profession, and his knowl- 
edge of the law only enables him to cooperate more fully 
with his legal brother in a common effort to attain the 
ends of equity and justice. Friendly cooperation rather 
than combination would seem to be the logical develop- 
ment of engineering, law, and accountancy. Each of 
these professions has within it ample ground that is in- 
dividual and distinctive, although in company with all 
other classifications of human knowledge and activity 

90 American Economic Association 

there are of necessity certain points of contact where one 
merges in the other. 

The so-called business adviser, as a distinct entity, is 
scarcely yet a concrete proposition, and it is hardly con- 
ceivable that he will attract much serious attention in the 
near future. Advice will be sought by the business man 
according to his needs from all the professions, and with 
the present development the ground seems to be so cov- 
ered that there is little room for another specific profes- 
sion unless it is to supplant some one of those already in 
action. Neither the need nor the probability for this 
exists today, and discussion of it is little worth while. 

Granting, then, that accountancy is to retain an inde- 
pendent existence, some would urge that its largest use- 
fulness will be attained by specialization. That is to say, 
certain members of the profession will devote all their 
attention, for instance, to banking, and will thus become 
deeply versed in not only the accounts of banking insti- 
tutions but also familiar with all the mysteries of fiscal 
operations. Others, again, will find their field in the 
foundry or in the machine shop, where they will familiar- 
ize themselves with industrial processes and the means of 
creating and maintaining the most effective forms of or- 
ganization, as well as the most simple and yet most com- 
prehensive methods of accounting for these classes of 
business activity. 

Still others may specialize in the organization, adminis- 
tration, and accounting of our great department stores. 
So on through the list some would have us see the ac- 
countant of the future turning away from general practice 
to the less extensive but more intensive work of the spe- 
cialist. In some ways this is an attractive vision. The hu- 
man mind does reverence to the man who has chosen to 
limit the breadth of his field to pursue it to unlimited 

Accounting as a Profession 91 

heights and depths, — whatever that study happens to be. 

These forms of specialization, however, exact their 
own penalty. It is the rare man indeed who can at once 
maintain intensity and breadth of vision, and it is at least 
an open question whether professions in which specializa- 
tion has been carried farthest, as in medicine, have found 
it an unmixed blessing. Is it not a matter of common 
knowledge that the health, even the life, of many a patient 
has been imperilled by the severe specialist who, enam- 
oured with his own little branch of medical science, has 
failed of that larger vision that would have detected con- 
tributing causes of first importance? 

Two factors seem to militate against a high degree of 
specialization in accountancy. One is the fact that "busi- 
ness" is a large and complicated concept, and, although at 
first blush it would seem as though this were an argument 
in favor of specialization, it is nevertheless true that the 
business man has to entertain this concept, and anyone 
who is to be of any but minor assistance to him must be 
able to approach a problem with a more comprehensive 
knowledge than a specialist can hope to bring to bear 
upon it. Much of the work that has occasionally brought 
discredit upon accountancy in the past has been the result 
of a lack of intelligent appreciation of the larger under- 
lying principles involved. It is a relatively easy thing to 
devise ways and means of dealing with small sections of a 
problem, but, unless these be coordinated with other sec- 
tions to which they bear a more or less intimate relation, 
the practical operation of the whole will be retarded 
rather than forwarded. Knowledge gained through an 
audit is frequently of the highest value to the account- 
ant in devising a system of accounts or records; and 
experience in one branch of business is often extremely 
useful if not absolutely necessary for an accountant to 

92 American Economic Association 

deal satisfactorily with the affairs of other types of busi- 

Another important factor working against a highly de- 
veloped type of specialization is the extensive organization 
required in an accountant's office. There are, of course, 
many men who are practicing alone, but even these, if 
their practice is of any moment, find it necessary to main- 
tain staff organizations that are out of proportion to those 
required in most, if not all, other professions. The ten- 
dency of the times is, moreover, strongly towards the lar- 
ger organizations found in firms made up of a number of 
partners and carrying large permanent staffs of trained 
assistants. Further than this such firms find it neces- 
sary to maintain offices in perhaps a number of different 
cities. All this makes specializing difficult even though 
such specialization were considered desirable. 

If, then, accountancy is not to lose its existence, and is 
not to split up into a number of camps, what, it may be 
asked, has the future in store? In answer to this, and 
while denying most positively that the accountant is to 
become a narrow specialist, it may be frankly conceded 
that there are two phases of accounting work, each pre- 
senting some distinctive features. One is analytic as typ- 
ified by the audit and the examination; the other is syn- 
thetic or constructive, instances of which are found in the 
construction and installation of cost and other systems of 

It is quite probable that some division along this broad 
line will take place. Some accountants, or accounting 
firms, will find their largest field of usefulness in con- 
structive work, while others will build their reputation 
mainly upon audits and investigations. Many others, 
however, will undoubtedly combine these functions and 
will continue a general practice even though a certain 

Accounting as a Profession 93 

amount of specialization may be maintained in the firm or 
in the staff. The standardization of accounting classifica- 
tions and methods will have a tendency to reduce the vol- 
ume of constructive work, although it is probable that 
the growth in business and the generation of new ideas 
will more than counterbalance this contraction. So it is 
likely that for many years to come there will be a profit- 
able, although ever difficult and vexatious, field for the 
accountant in devising and installing accounting systems 
and reorganizing business methods. 

A very large development is almost certain to come in 
the near future in the matter of annual or at least of per- 
iodical audits of the accounts of corporations and others. 
It should be remarked in passing that the public generally 
in this country does not appreciate the real meaning of the 
term audit as used by accountants. The average man is 
likely to conceive of an audit as a checking over of 
vouchers and the comparison of entries in the books with 
various sorts of original data and in this manner ascer- 
taining the mathematical accuracy of the records. It is 
true that this is one form of an audit and commonly 
known among accountants as a detailed cash audit. It has 
and will continue to have a certain degree of usefulness, 
and will be employed more or less extensively in dealing 
with the accounts of smaller business organizations. In 
auditing the accounts of a large industrial corporation or 
of a trunk line railway, it is obvious that this method of 
procedure would entail a volume of work that would be 
prohibitive and would produce results in inverse ratio to 
the time spent upon the work. 

Time does not permit of an adequate discussion of the 
principles involved in the audit of the accounts of a large 
corporation, but, briefly speaking, attention must be di- 
rected mostly to the preparation of the balance sheet. If 

94 American Economic Association 

from year to year the balance sheets presented by a cor- 
poration are correct, it follows as a matter of course that 
the true profit and loss for each period is revealed, so that 
therefore the whole case rests upon the integrity of the 
balance sheet. Have the assets been properly valued? 
Has sufficient allowance been made for maintenance and 
depreciation? and for possible losses through bad debts 
or otherwise? Are the current assets properly classified 
so that an intelligent opinion can be formed as to their 
probable realization? Are all of the liabilities included, 
or is there perhaps a large volume of liabilities of under- 
lying companies that are not revealed upon the general 
balance sheet? These and many others are questions 
that present themselves, and are often of a most difficult 
and highly essential nature. 

It must be borne in mind that a balance sheet of any 
large corporation is not a statement of facts that can be 
demonstrated with mathematical accuracy so much as it 
is an expression of an honest and intelligent opinion. In 
this expression of opinion the public accountant is now 
being recognized as an authority, and what is being widely 
done through the voluntary action of corporations that 
desire to deal fairly with their investors will doubtless be- 
come a legal requirement, and before many years the inde- 
pendent audit of all corporations offering their securities 
to the public will be firmly established. 

With this, or possibly preceding it, will also come a 
civil liability on the part of the accountant for the faith- 
ful and diligent performance of his duties. As yet 
there are no decisions in this country upon the question 
of the liability of an auditor, but under the English law 
his liability, both civil and criminal, is pretty well estab- 
lished. A case in point was one in which two fairly 
prominent chartered accountants had been auditors of a 

Accounting as a Profession 95 

bank for a number of years, and had failed to disclose 
frauds that had been practiced by the officers of the insti- 
tution ; and upon the failure of the bank the auditors with 
the directors were, after trial, imprisoned at hard labor. 
In another leading case it is generally understood that a 
firm of accountants effected a settlement by paying 
£60,000 rather than take their chances with a jury. Civil 
liability on the part of the accountant is, I believe, certain 
to come in this country, and while each member of the 
profession may well pray that the offense shall not come 
by him, it is nevertheless true that the effect of a clearly 
defined civil liability will be salutary. It will give confi- 
dence to the business public in the accountant's certificate 
as nothing else will do, and while the best accountants to- 
day recognize their moral responsibility quite as much as 
it will ever be necessary for them to recognize any legal 
responsibility, the knowledge that a civil and possibly a 
criminal liability attaches to them will deter the careless 
or the indifferent. 

Accountancy, then, is not to be a thing of shreds and 
patches, but will, if those in whose hands its fortunes 
are entrusted fulfill their part, expand along the lines 
upon which it is now operating, growing in dignity and 
power until it will stand shoulder to shoulder, in the esti- 
mation of the public, with those older professions whose 
courses have been a laborious evolution of years and cen- 
turies. Accountancy will offer within itself a field for 
the exercise of widely differing talents, and while the 
individual members will vary in their scope and methods 
of practice, they will still be in the true sense of the 
term and will ever take pride in being called account- 

In an hour when complaints are heard on every side 
that the law is crowded, that the young man entering 

96 American Economic Association 

that noble profession has years of labor and of waiting 
before he can hope to gain renown, and when the same 
cry goes up from other professions, may we not well 
suggest to the young man aspiring for professional hon- 
ors that accountancy affords an adequate field for trained 
minds and willing hands, and offers inducements, finan- 
cial and otherwise, that are largely in excess of those at- 
tainable in any but exceptional instances in the older pro- 
fessions ?